An automated teller machine (ATM) is an electronic device that allows a bank's customers to make cash withdrawals and check their account balances without the need for a human teller. Many ATMs also allow people to deposit money, transfer money between their bank accounts or even buy postage stamps. The first ATM was reportedly installed in London in 1967 by Barclay's bank. Today, ATMs are ubiquitous, with millions distributed throughout the United States and the world.
Many ATMs are associated with an individual bank. However, most ATMs are connected to an interbank network that enables customers to interact with money from machines not belonging to the bank where they have their account. Thus, a customer may take advantage of an entire network of ATMs even though the customer may have an account at only one bank.
In most modern ATMs, the customer identifies him or herself by inserting a plastic card with a magnetic stripe that contains an account number. The customer then verifies his or her identity by entering a four-digit passcode that is known as a PIN.
For years, ATMs have been configured to accept envelopes containing deposits. However, only recently, ATM technology has improved so that ATMs can now count cash on deposit and accept cash deposits along with check deposits.
Current ATMs and banking systems are designed for individual users who are already registered participants in the system. I.e., the banking system is generally directed toward individuals with bank accounts, checking accounts, credit cards and/or debit cards. However, the population includes a large number of individuals who are not registered with a financial institution and who do not possess the necessary bank accounts to perform daily bank transactions. These people use cash for purchases, bill payments, and for their other monetary transactions.
The exclusive use of cash payments has a number of problems. First, sending cash through the mail is highly discouraged because the cash may be stolen before reaching its destination, the mailing takes time to be shipped and may arrive late, and the sender is not provided with any receipt. (Even if the sender receives a receipt confirming delivery, the receipt does not prove that the necessary amount of cash was in the mailing). Thus, cash transactions are currently conducted face-to-face. However, face-to-face transactions require the person paying to be present—often a difficult task when the payer works a full-time job or in emergencies. Yet, late payment of taxes or utilities may result in service interruptions. In addition, quite often, the payer will have a need to transfer funds to a remote location such as another city or even another country that may be thousands of miles away.
A payer may use a non-bank financial institution, such as Western Union, to send money that is urgently needed to accommodate the beneficiaries' immediate needs such as to pay for food, education, books, and college tuition. The non-bank financial institution provides some convenience by remaining open later than normal banking hours and may allow transactions to be conducted without a standing account. However, the user is still bound by the working hours of the non-bank financial institution, long lines, higher fees due to the personal service and product monopoly, lack of competition due to the barriers to entry, potential lack of security, poor customer service, and lack of support for multiple languages. In addition, there is usually a longer time window needed to conduct the payment of funds and transfer of cash with the non-bank financial institution. Barriers also exist on the receiver-end. For instance, the receiver will need to wait in line to present a confirmation number sent to them by the payer. If the confirmation number is wrong then they will not get their money. Tellers can type in the wrong confirmation number even though the receiver of funds has the right number. Language barriers often further exacerbate this problem. With these and other issues in mind, a real need exists for a new cash transfer and payment system.